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Hobart looking for ways to protect residents from potential problems with contractors

Updated: February 22, 2013 6:14AM



HOBART — The City Council is continuing to look for ways to protect residents from potential problems with contractors after learning it has no authority to require contractors to post a performance bond for residential work.

After a lengthy discussion, the council said it would instead consider an increase in the code enforcement bond amount required of contractors doing business in the city and passage of a new ordinance requiring insurance companies to inform the city if a contractor’s insurance has been canceled.

Both efforts were recommended by Building Official Mike Hannigan, who said a bond company employee told him the $5,000 bond now required by the city is too small, that most cities the size of Hobart ask for $10,000 bonds.

Hannigan said the bond would be good for any city or town in Lake County and the county itself.

Hannigan explained a performance bond, which the city requires of commercial properties, is issued by an insurance company and guarantees all work will be satisfactorily completed on time. The code enforcement bond required by the city guarantees the work is done according to city code, he said.

“Our bond has nothing to do with performance or schedules,” Hannigan said.

He added the city now has no way of knowing if a contractor’s insurance has been canceled.

The council has been searching for ways to help protect its residents after learning of several people who paid a contractor both based and licensed in Hobart to do work on their homes, but the work was never completed. The city later discovered the contractor wasn’t insured.

Council members Pete Mendez, D-2nd, and Monica Wiley, D-at large, previously suggested contractors be required to post performance bonds as one means to help their clients.

However, City Attorney Anthony DeBonis said the city has no authority to require performance bonds for residential construction. He added that the code enforcement bonds required by the city do not allow it to go after the contractor for work not performed.

“You can take the city license away from the contractor or fine him, but that’s the extent of the board’s authority,” DeBonis said.

He said, however, the fine could only be imposed for work not done to code, not for work not completed.

He cautioned the council not to get involved in personal matters, pointing out there are other venues residents should turn to first, including the courts and the Indiana attorney general’s office.

“You will have a plethora of problems that are private matters,” DeBonis said.

Hannigan said the city often finds there are no dates on contracts and suggested language be added stating work must be started within 30 days of a permit drawn.

Mayor Brian Snedecor, a former police officer, said one of the biggest problems in prosecuting these cases was no completion date on the contract.



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